Careful What You Say

Little was heard of housing bubbles in Canada up to about a year ago. Now, predictions of crashes are on the front cover of Maclean’s and other publications. One might wonder if we are talking ourselves into a housing miasma, even though the fundamentals don’t point to one.

Consider affordability. The Bank of Canada’s housing affordability index shows that newly built standard houses are as affordable as 10 years ago. And the Royal Bank of Canada’s affordability indexes for existing housing only “exceed their long-term averages modestly, although the national figures are exaggerated by extremely poor affordability in Vancouver.”
Moreover, credible analysts don’t see a U.S.-style crash. Professor Robert Shiller told CBC News in September that Canada should be spared because its banks have low subprime exposure. And Gluskin Sheff economist David Rosenberg wrote in a November note “that the U.S. plunge five years ago followed years of credit-tightening moves… anyone think that [the Bank of Canada] is going to raise interest rates 450 basis points with inflation barely above 1 per cent?”
Yet, some media sources are now painting a dire prognosis for Canadian housing. It brings to mind the 2012 paper, “What Have They Been Thinking? Home Buyer Behavior in Hot and Cold Markets,” written by Mr. Shiller and co-authors, Karl E. Case and Anne Thompson.
The paper looks at press coverage leading up to the U.S. housing collapse and documents the increasing frequency of articles depicting U.S. housing as a bubble. June of 2005 was particularly busy, with cover stories in the Economist, Barron’s, and Time Magazine.
Mr. Shiller and co-authors argue the prominence of the bubble theme produced “a turning point in public thinking” that led to prices turning down, beginning in 2006. A similar point was made by Mr. Shiller in a 2006 paper, in which he wrote: “there are reasons to suspect that the price changes … are related to public swings in opinions rather than fundamentals.”
Could Canada similarly be talking itself into a housing crash (possibly followed by a financial crisis and years of stagnation)? Or will the fundamentals usher in the soft landing that the federal government is trying to achieve through tighter mortgage rules? Messrs. Shiller and Rosenberg believe the fundamentals will win because the Canadian setting is more supportive. Let’s hope so, if only so that Canadians are spared the trauma Americans have experienced.
READERS: Do you see signs of a crash? Or do you just hear the talk and worry?
http://http://www.theglobeandmail.com/globe-investor/investor-community/trading-shots/is-canada-talking-itself-into-a-housing-crisis/article7589164/

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We were recommended by a friend and we don't regret a thing. Cynthia and Edward Cherie made the experience of buying my first home painless, extremely smooth and easy. They were incredibly patient, communicated often by phone, and my favorite by text and email, answering promptly and I was never scared or shy to ask silly newbie questions.
They walked us through the insane amounts of paper work, making a daunting task easier to digest, and alleviating any fears we may of had. They helped us get us a thorough and in-depth house inspection that I was very happy with. And made negotiation on our house painless, quick and smooth flying!!!
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Cynthia and Ed were amazing. From the moment I met them, they were extremely welcoming, knowledgeable and made me feel comfortable. They answered all my questions and made me feel confident in the decisions we made throughout the process. I’ve heard horror stories from people when buying their first home but honestly, thanks to Cynthia and Ed for their hard work, this journey has been pleasant and enjoyable. I can’t thank them enough.read more

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Took our first step today towards purchasing our first home! We were nervous and had a lack of confidence. We received the warmest of welcomes, and we were given total transparency with each step of the process. We were amazed with the wisdom, and caring culture of Balance Mortgages. They work well as a team, and gave us a tremendous amount of confidence!!
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I can't say enough good things about Ed and Cynthia at Balance Mortgages. This was our first home and they really helped us understand our mortgage, the steps we needed to take and the support to get us into our first home. They are both personal, while also providing the key details so that you enter your mortgage and home ownership with all that you need. I highly recommend them for your mortgage needs!!read more

Ed and Cynthia were incredibly helpful! From the moment we sat down in their office to the final email, they stayed attentive to our process and kept the steps simple and well explained. Their attention to detail was precise and they were patient with our many questions. I would highly recommend the Cherie team to anyone!!read more

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Dear Cynthia,
Thank you so much for all your help with renewing my mortgage!!! For helping me with the title change and being so generous with time and information about minimum income needed to qualify for new financing. I’m pretty sure that without you working so hard I would not have secured this awesome 5 year fixed rate. I do NOT take for granted the extra effort you took to carefully analyze my self-employment tax and bank statements during the past 6 months. I know it wasn't easy, but you got it done!
While working with you, I noticed that you are extremely knowledgeable about the mortgage industry and that you did an excellent job for me. If I were to rate my overall satisfaction, then 10 out of 10 wouldn’t be enough to cover how much you went above and beyond my expectations. I was so pleased to work with such an intelligent professional and won’t hesitate to recommend your name every time I hear someone telling me about plans for a new home purchase, mortgage renewal or refinancing. I will tell them about your eagerness to do all you could to help despite my challenging mortgage situation.
With each low bi-weekly payment, I’ll be thinking about how grateful I was to have had you assisting me with this renewal. I’m already looking forward to having you involved once again 5 years from now.
Wishing you all the best,
Jack Bornread more